California

Gas Prices to Rocket, Scientists Predict

California is on the verge of a gasoline shortage and sharply higher prices at the pump because demand soon will outpace supplies, an advocacy group of scientists predicted Tuesday.

The state "is facing a second energy crisis within the year" after the electricity fiasco, said Julia Levin, California policy coordinator for the Union of Concerned Scientists.

"The supply [of gasoline] is limited, and consumption of gasoline is increasing rapidly," she said at a Sacramento news conference. "That leaves California consumers vulnerable to serious price increases."

The situation will be exacerbated by California's planned phaseout of methyl tertiary butyl ether--a gasoline additive, used to reduce emissions, that was found to pollute ground water--by the end of 2002, the group said. The state probably will replace MTBE with ethanol, but there are widespread concerns that ethanol supplies will fall short by that deadline, sparking gasoline shortages and higher prices.

"Refineries are predicting that they'll face a 6% to 10% shortfall in gasoline supplies," Levin said.

Asked whether the group would call on state officials to delay the MTBE deadline until enough ethanol is available, Levin said, "We don't think California should have to make a choice between clean air and clean water. Postponing the MTBE phaseout will just postpone the gasoline crisis."

The group further warned that prospects for gasoline shortages exist beyond the MTBE transition and that the only solution is to reduce demand for fuel.

The scientists group called on state authorities to use incentives, regulations and education to make mass transit and other alternative transportation more available, and to encourage consumers to buy more fuel-efficient vehicles and tires. The group also reiterated its call for Congress to raise U.S. fuel-economy standards on passenger cars and light trucks.

After spurting sharply higher this spring, prices for crude oil as well as gasoline and other refined fuels have dropped in recent weeks as supplies increased. But last week, U.S. crude oil inventories fell slightly, as expected, according to the industry's trade group, the American Petroleum Institute. Crude stocks dropped by 712,000 barrels to 315.3 million but remain 7.3% above their level of a year earlier.

Gasoline supplies dropped a bit more than expected, falling 1.98 million barrels in the latest week to 216 million, the API said. Gasoline supplies are up 3.7% from a year ago.